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Wednesday, January 16, 2008

New accounting standards leave too much to chance

Vague wording means loopholes won't be closed

Canada's auditors and accounting standard setters are aggressively promoting the adoption of International Financial Reporting Standards (IFRS) as a step forward for investors. The premature nature of the change and its costly drawbacks were detailed in part one of this series yesterday. Now it's time to examine the purported benefits of IFRS and the impact it will have on investors.

The notion of a single international accounting framework is a great concept with many potential benefits. However, it remains a theory that is far from implementation. Simply put, IFRS is too weak in its current form for investors to accept on par with current Canadian standards. Nonetheless, we are on course to implement IFRS in just three years.